Whether you are a newcomer or have been using bitcoin for a while, you probably wonder, “Where are the best use cases for bitcoin?” The short answer is pretty much everywhere. But there are some key areas where Bitcoin is already being widely used, and we’ll discuss those in a minute. First, let’s take a closer look at some of the areas where bitcoin is most prevalent.
In almost a decade and a half, bitcoin’s applications have extended beyond payments and a speculative digital asset to several other use cases. The bitcoin industry is expanding quickly, and blockchain, Web3, and metaverse have quickly become mainstream technologies. While there are over 4,000 different types of cryptocurrency, several have found unique applications and solutions in the finance world. Bitcoin can be used for multipurpose applications other than trading, mining, and stacking.
Listed below are 10 areas where bitcoin is currently used.
- Decentralized Digital Currency
- Crypto Banking
- Asset Tokenization
- Onchain Governance
- Smart Contracts
- Corporate Treasuries
- State Treasuries
- Store of Value During Times of Conflict
- Online Game-bling
- Salary Payments for Freelancers in Emerging Markets
1. Corporate Treasuries
More and more businesses incorporate bitcoin (BTC) as part of their corporate treasuries. What started as an unorthodox shift by a few publicly traded companies in 2020 has become a trend.
MicroStrategy, a business intelligence firm, made waves in 2020 when they decided to buy $250 million worth of bitcoin and planned to use the digital currency as a primary treasury asset.
The action sent ripples in the financial industry, especially as the company would continue to purchase bitcoin at regular intervals. As of today, MicroStrategy holds over 124,391 BTC.
According to MicroStrategy’s CEO, Michael Saylor, the decision to add bitcoin to their balance sheet reserves was based on the belief that the digital currency “is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”
MicroStrategy is not the only institution taking bitcoin seriously. In February 2021, Tesla purchased $1.5 billion worth of bitcoin for treasury purposes and indicated it would start accepting bitcoin as a mode of payment.
A recent survey by Fidelity Assets revealed that more than 50 percent of companies surveyed in Europe, the United States, and Asia currently invest in digital assets.
Beyond benefitting from the volatility of cryptocurrencies, institutions can use bitcoin as a part of their corporate treasury to hedge against currency debasement and inflation. Even if large-scale debasement takes a long time to happen, the reality is that bitcoin is increasingly being viewed as a new haven asset of the digital age.
2. State Treasuries
Governments were extremely cautious about integrating bitcoin into local monetary systems from the onset. However, in September 2021, El Salvador announced it would start using bitcoin as legal tender in the country and hold the digital currency in its treasury.
This signaled a shift that may signify governments incorporating bitcoin into their state treasuries. In the case of El Salvador, people can use bitcoin to pay for goods and services and pay for certain public services.
El Salvador’s relationship with bitcoin has progressed, and the country even announced a bitcoin-backed bond to fund critical infrastructure. The state plans to use half of the targeted $1 billion bonds to purchase bitcoin and split any eventual capital gains between the country and bondholders as a special dividend.
El Salvador is not the only country experimenting with bitcoin as seen by the current armed conflict in Ukraine. The Ukrainian government accepts bitcoin donations to assist in the economic and humanitarian fallout and has made cryptocurrency legal.
Price appreciation of bitcoin is a strong motivation for bitcoin state treasuries, but national and strategic interests also play a key role. The reality is that bitcoin allows governments to cut out from the dollar-denominated monetary system to trade and settle international obligations.
3. Store of Value During Times of Conflict
During times of conflict where access to traditional payment systems is limited or non-existent, bitcoin can be used to bridge the gap.
For instance, the current Russian-Ukraine conflict has seen the rise of bitcoin donations to fund humanitarian operations. According to Elliptic, a blockchain analytic firm, more than 4,000 donations have been made to bitcoin wallet addresses associated with the government, NGOs, and volunteer groups.
Ordinary Ukrainians fleeing the conflict find it difficult to access banking services and opt to use bitcoin across borders. Bitcoin’s pseudonymity and borderless nature enable Ukrainians to receive donations and the digital currency to purchase basic amenities.
4. Online Game-bling
Bitcoin is increasingly used for online gambling, especially in countries where digital payment systems aren’t great.
Bitcoin’s pseudonymity also allows gamblers to have fun without worrying about being scrutinized by external parties. Bitcoin also offers frictionless online payments and is secure compared to credit cards, prone to phishing and social engineering schemes.
Bitcoin is also cheaper than traditional online payments. For instance, gamblers can enjoy playing bitcoin dice games and cash out their winnings at a relatively lower cost when compared to bank transfers.
5. Salary Payments for Freelancers in Emerging Markets
Many crypto freelancers in countries where banking systems are limited rely on digital currencies, such as bitcoin, to receive their salaries. Crypto freelancers may include content writers, researchers, developers, graphic designers, etc.
In some parts of the world, crypto freelancers have to contend with complicated banking procedures, long payment durations, and unfavorable FX rates when receiving salary payments abroad. Bitcoin’s peer-to-peer quality makes this easier as payments are made directly to a user’s wallet with no counterparties involved.
This ensures crypto freelancer receive their salary payments promptly and at low fees. They can then liquidate their BTC on a crypto exchange for cash or exchange bitcoin for cash through trusted informal networks.
More Areas Where to use bitcoin
If you wonder where to use bitcoin, you have come to the right place. While cryptocurrency is currently popular means of payment, many sites and businesses are beginning to accept bitcoin as payment. These sites include Overstock, Dell, and Steam. You can also lookup businesses that accept bitcoin on Coinmap.com. However, it is advisable to check the terms and conditions of each business before using the cryptocurrency. However, use the site carefully, as some merchants may not accept your payment method.
Areas of Bitcoin Adoption
The high rate of Bitcoin adoption in developing countries may be due to the inaccessibility of banks. Many people in these countries do not have bank accounts and cannot use them to make payments. This has limited e-commerce in developing countries. In addition, inaccessibility to financial services has made it difficult to accept payments from other countries. As a result, they have turned to Bitcoin as a secure alternative to traditional currencies.
The main challenges facing bitcoin adoption in developing countries are largely related to banking systems, regulatory frameworks, and the cost of securing accounts. While the financial system of developing countries is often unstable, a lack of traditional financial institutions may inhibit the adoption of cryptocurrencies. Despite this, the rise of peer-to-peer trading in emerging markets is a significant driver of the growth of cryptocurrency.
The study found that Vietnam, India, and Pakistan have the highest crypto adoption levels, while the United States dropped from sixth to eighth place. Six African countries ranked in the top 20.